# Concrete Pumping Holdings, Inc.: Form 10-Q for the period ended Jul 31, 2023

- Company: [Concrete Pumping Holdings, Inc.](/companies/bbcp.md) (CIK 1703956)
- Form: 10-Q
- Filed: 2023-09-07
- Accepted by EDGAR: Sep 7, 2023, 17:05 ET
- Period: 2023-07-31
- Accession: 0001437749-23-025409
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1703956/000143774923025409/bbpp20230731_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1703956/000143774923025409/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-07-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-05-01 to 2023-07-31 | $112.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2022-11-01 to 2023-07-31 | $299.5m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-05-01 to 2023-07-31 | $71.2m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2022-11-01 to 2023-07-31 | $192.6m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-05-01 to 2023-07-31 | $49.5m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2022-11-01 to 2023-07-31 | $129.4m | us-gaap:GrossProfit |
| Operating income | 3 months, 2023-05-01 to 2023-07-31 | $19.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-11-01 to 2023-07-31 | $42.2m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-05-01 to 2023-07-31 | $7.1m | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-11-01 to 2023-07-31 | $21.3m | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-05-01 to 2023-07-31 | $3.3m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-11-01 to 2023-07-31 | $5.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-05-01 to 2023-07-31 | $10.3m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-11-01 to 2023-07-31 | $22.4m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-05-01 to 2023-07-31 | $0.18 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-11-01 to 2023-07-31 | $0.38 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-05-01 to 2023-07-31 | $0.18 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-11-01 to 2023-07-31 | $0.38 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-05-01 to 2023-07-31 | 54,104,738 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-11-01 to 2023-07-31 | 54,262,940 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-11-01 to 2023-07-31 | $66.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2022-11-01 to 2023-07-31 | $43.2m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2022-11-01 to 2023-07-31 | $9.7m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-07-31 | $11.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-07-31 | $97.9m | us-gaap:AssetsCurrent |
| Total assets | at 2023-07-31 | $914.0m | us-gaap:Assets |
| Current liabilities | at 2023-07-31 | $100.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-07-31 | $585.3m | us-gaap:Liabilities |
| Long-term debt | at 2023-07-31 | $371.5m | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2023-07-31 | $303.8m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 43,515 characters.

*You should read the following management’s discussion and analysis together with Concrete Pumping Holdings, Inc.’s (the “Company”, “we”, “us” or “our”) condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. All references to "Notes" in this Item 2 of Part I refer to the notes to condensed consolidated financial statements included in Item 1 of Part I of this report. All references to “Annual Report” refers to our Form 10-K for the year ended October 31, 2022 filed with the SEC on January 31, 2023.*

### Cautionary Statement Concerning Forward-Looking Statements and Risk Factors Summary

Certain statements in this Quarterly Report on Form 10-Q ("Report") constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among other things, statements regarding our business, financial condition, results of operations, cash flows, strategies and prospects, and the potential impact of the COVID-19 pandemic on our business. These forward-looking statements may be identified by terminology such as “likely,” “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or "views" or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained in this Report are reasonable, we cannot guarantee future results.

The forward-looking statements contained in this Report are based on our current expectations and beliefs concerning future developments and their potential effects. These statements involve known and unknown risks, uncertainties (some of which are beyond our control) and other factors that may cause the actual results, performance or achievements of the Company to be materially different from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, the items in the following:

- the adverse impact of recent inflationary pressures, including significant increases in fuel costs, global economic conditions and events related to these conditions, including the ongoing war in Ukraine and the COVID-19 pandemic;
- general economic and business conditions, which may affect demand for commercial, infrastructure, and residential construction and adverse effects of major endemics or pandemics on our business;
- our ability to successfully implement our operating strategy;
- our ability to successfully identify, manage and integrate acquisitions;
- the restatement of our financial statements for the quarter ended July 31, 2022 and our ability to establish and maintain effective internal control over financial reporting, including our ability to remediate the existing material weakness in our internal controls;
- governmental requirements and initiatives, including those related to mortgage lending, financing or deductions, funding for public or infrastructure construction, land usage, and environmental, health, and safety matters;
- seasonal and inclement weather conditions, which impede the installation of ready-mixed concrete;
- the cyclical nature of, and changes in, the real estate and construction markets, including pricing changes by our competitors;
- our ability to maintain favorable relationships with third parties who supply us with equipment and essential supplies;
- our ability to retain key personnel and maintain satisfactory labor relations;
- disruptions, uncertainties or volatility in the credit markets that may limit our, our suppliers’ and our customers’ access to capital;
- personal injury, property damage, results of litigation and other claims and insurance coverage issues;
- our substantial indebtedness and the restrictions imposed on us by the terms of our indebtedness;
- the effects of currency fluctuations on our results of operations and financial condition; and
- other factors as described in the section entitled “Risk Factors” in our Annual Report.

Our forward-looking statements speak only as of the date of this report or as of the date they are made, and we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. However, any further disclosures made on related subjects in subsequent reports on Forms 10-K, 10-Q and 8-K should be considered.

### Business Overview

The Company is a Delaware corporation headquartered in Denver, Colorado. The unaudited consolidated financial statements included herein include the accounts of Concrete Pumping Holdings, Inc. and its wholly owned subsidiaries including Brundage-Bone Concrete Pumping, Inc. (“Brundage-Bone”), Capital Pumping, LP (“Capital”), and Camfaud Group Limited (“Camfaud”), and Eco-Pan, Inc. (“Eco-Pan”).

As part of the Company’s business growth and capital allocation strategy, the Company views strategic acquisitions as opportunities to enhance our value proposition through differentiation and competitiveness. Depending on the deal size and characteristics of the M&A opportunities available, we expect to allocate capital for opportunistic M&A utilizing cash on the balance sheet and the Company's revolving line of credit. In recent years and as further described below, we have successfully executed on this strategy, including (1) our November 2021 acquisition of Pioneer Concrete Pumping Service, Inc. (“Pioneer”) for the purchase consideration of $20.2 million, which provided us with complementary assets and operations in both Georgia and Texas and (2) our acquisition of Coastal Carolina Concrete Pumping, Inc. ("Coastal") in August 2022 for the purchase consideration of $30.8 million, which expanded our operations in the Carolinas and Florida.

#### U.S. Concrete Pumping

All branches operating within our U.S. Concrete Pumping segment are concrete pumping service providers in the United States ("U.S."). Our U.S. Concrete Pumping core business is the provision of concrete pumping services to general contractors and concrete finishing companies in the commercial, infrastructure and residential sectors. Equipment generally returns to a “home base” nightly and these branches do not contract to purchase, mix, or deliver concrete. This segment collectively has approximately 100 branch locations across approximately 20 states with their corporate headquarters in Denver, Colorado.

In recent years, U.S. Concrete Pumping has grown through the acquisitions of Coastal in August 2022 and Pioneer in November 2021, as described above, in addition to its greenfield expansion into Metro Washington DC in fiscal 2022.

#### U.S. Concrete Waste Management Services

Our U.S. Concrete Waste Management Services segment consists of our U.S. based Eco-Pan business. Eco-Pan provides industrial cleanup and containment services, primarily to customers in the construction industry. Eco-Pan uses containment pans specifically designed to hold waste products from concrete and other industrial cleanup operations. Eco-Pan has 19 operating locations across the U.S. with its corporate headquarters in Denver, Colorado.

#### U.K. Operations

Our U.K. Operations segment consists of our Camfaud, Premier and U.K. based Eco-Pan businesses. Camfaud is a concrete pumping service provider in the U.K. Our U.K. core business is primarily the provision of concrete pumping services to general contractors and concrete finishing companies in the commercial, infrastructure and residential sectors. Equipment generally returns to a “home base” nightly and does not contract to purchase, mix, or deliver concrete. Camfaud has approximately 30 branch locations throughout the U.K., with its corporate headquarters in Epping (near London), England. In addition, we have concrete waste management operations under our Eco-Pan brand name in the U.K. and currently operate from a shared Camfaud location.

#### Corporate

Our Corporate segment is primarily related to the intercompany leasing of real estate to certain of our U.S. Concrete Pumping branches.

### Impacts of Macroeconomic Factors and COVID-19 Recovery

There have been no material changes to the "Impacts of Macroeconomic Factors and COVID-19 Recovery" previously disclosed in our Annual Report. For a detailed discussion of the risks that affect our business, please refer to the section entitled “Impacts of Macroeconomic Factors and COVID-19 Recovery” in the Annual Report.

### Results of Operations

The tables included in the period-to-period comparisons below provide summaries of our revenues, gross profits and net income for our business segments for the three and nine months ended July 31, 2023 and 2022.

### Three Months Ended July 31, 2023 Compared to the Three Months Ended July 31, 2022

#### Revenue

*(in thousands, unless otherwise stated)*

| Revenue | Three Months Ended July 31, 2023 | 2022 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| U.S. Concrete Pumping | $87,323 | $77,352 | $9,971 | 12.9% |
| U.K. Operations | 17,260 | 14,417 | 2,843 | 19.7% |
| U.S. Concrete Waste Management Services | 16,505 | 12,813 | 3,692 | 28.8% |
| Corporate | 625 | 625 | - | 0.0% |
| Intersegment | (1,042) | (738) | (304) | 41.2% |
| Total revenue | $120,671 | $104,469 | $16,202 | 15.5% |

*Total revenue.* Total revenues were $120.7 million for the three months ended July 31, 2023 compared to $104.5 million for the three months ended July 31, 2022. Revenue by segment is further discussed below.

*U.S. Concrete Pumping.* Revenue for our U.S. Concrete Pumping segment increased by 12.9%, or $10.0 million, from $77.4 million in the third quarter of fiscal 2022 to $87.3 million for the third quarter of fiscal 2023 primarily driven from prior acquisitions and improved pricing.Revenue attributable to our acquisition of Coastal was $5.6 million for the third quarter of fiscal 2023.

*U.K. Operations.* Revenue for our U.K. Operations segment increased by 19.7%, or $2.8 million, from $14.4 million in the third quarter of fiscal 2022 to $ 17.3 million for the third quarter of fiscal 2023. Excluding the impact from foreign currency translation, revenue was up 17.5% year-over-year. The increase in revenue was primarily attributable to improved pricing across the U.K. region.

*U.S. Concrete Waste Management Services.* Revenue for the U.S. Concrete Waste Management Services segment improved by 28.8%, or $3.7 million, from $12.8 million in the third quarter of fiscal 2022 to $16.5 million for the third quarter of fiscal 2023. The increase in revenue was primarily due to organic volume growth due to an increase in demand and pricing improvements.

*Corporate.* There was no change in revenue for our Corporate segment for the periods presented. Any year-over-year changes for our Corporate segment are primarily related to the intercompany leasing of real estate to certain of our U.S. Concrete Pumping branches. These revenues are eliminated in consolidation through the Intersegment line item.

#### Gross Profit and Gross Margin

*(in thousands, unless otherwise stated)*

| Gross Profit and Gross Margin | Three Months Ended July 31, 2023 | 2022 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Gross Profit | 49,484 | 41,934 | 7,550 | 18.0% |
| Gross Margin | 41.0% | 40.1% |  |  |

*Gross margin.* Our gross margin for the third quarter of fiscal 2023 was 41.0% compared to 40.1% in the third quarter of fiscal 2022. The slight increase in our gross margin was primarily related to the strong revenue growth discussed above and the easing of diesel fuel prices, partially offset by inflationary pressures primarily in labor inflation.

#### General and administrative expenses

*General and administrative expenses ("G&A").* G&A expenses for the third quarter of fiscal 2023 were $29.9 million, an increase of $2.1 million from $27.8 million in the third quarter of fiscal 2022. G&A expenses as a percent of revenue were 24.8% for the third quarter of fiscal 2023 compared to 26.6% for the same period a year ago. The dollar increase in G&A expenses was largely due to higher labor costs of approximately $3.0 million as a result of additional headcount from recent acquisitions.

Excluding amortization of intangible assets of $4.7 million, depreciation expense of $0.6 million and stock-based compensation expense of $0.9 million, G&A expenses were $23.7 million for the third quarter of fiscal 2023 (19.6% of revenue), up $3.2 million from $20.5 million for the third quarter of fiscal 2022 (19.6% of revenue). The increase was primarily due to the higher labor costs as discussed above.

#### Total other income (expense)

*Interest expense, net.* Interest expense, net for the third quarter of fiscal 2023 was $7.1 million, up $0.5 million from $6.5 million in the third quarter of fiscal 2022. The increase was primarily attributable to a higher average ABL revolver draw during the fiscal 2023 third quarter as compared to the same quarter a year ago.

*Change in fair value of warrant liabilities.* During the third quarter of fiscal 2023 the Company recognized a $0.9 million gain on the fair value remeasurement of our liability-classified warrants. During the third quarter of fiscal 2022 the Company recognized a $7.4 million gain on the fair value measurement of our liability-classified warrants. The continued decline in the fair value remeasurement of the public warrants for both periods presented is due to the Company's share price trading below the exercise price as the warrants get closer to expiring in December 2023.

#### Income tax expense

*Income tax expense.* For the third fiscal quarter ended July 31, 2023 the Company recorded income tax expense of $3.3 million on pretax income of $13.7 million. For the same quarter a year ago, the Company recorded an income tax expense of $2.0 million on a pretax income of $15.0 million. The effective tax rate for the three months ended July 31, 2023 was primarily impacted by the respective change in fair value of warrant liabilities, which is not recognized for tax purposes.

### Nine Months Ended July 31, 2023 Compared to the Nine Months Ended July 31, 2022

#### Revenue

*(in thousands, unless otherwise stated)*

| Revenue | Nine Months Ended July 31, 2023 | 2022 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| U.S. Concrete Pumping | $232,896 | $212,189 | $20,707 | 9.8% |
| U.K. Operations | 45,207 | 39,980 | 5,227 | 13.1% |
| U.S. Concrete Waste Management Services | 44,445 | 34,551 | 9,894 | 28.6% |
| Corporate | 1,875 | 1,875 | - | 0.0% |
| Intersegment | (2,386) | (2,197) | (189) | 8.6% |
| Total revenue | $322,037 | $286,398 | $35,639 | 12.4% |

*Total revenue.* Total revenues were $322.0 million for the nine months ended July 31, 2023 compared to $286.4 million for the nine months ended July 31, 2022. Revenue by segment is further discussed below.

*U.S. Concrete Pumping.* Revenue for our U.S. Concrete Pumping segment increased by 9.8%, or $20.7 million, from $212.2 million in the nine months ended July 31, 2022 to $232.9 million primarily driven by revenue contributions from recent acquisitions, coupled with organic growth in certain of our markets, notably in the southeastern region of the U.S. Revenue attributable to our acquisition of Coastal was $15.0 million for the nine months ended July 31, 2023.

*U.K. Operations.* Revenue for our U.K. Operations segment increased by 13.1%, or $5.2 million, from $40.0 million in the nine months ended July 31, 2022 to $45.2 million. Excluding the impact from foreign currency translation, revenue was up 19.0% year-over-year. The increase in revenue was driven by a robust improvement in pricing across the U.K. region.

*U.S. Concrete Waste Management Services.* Revenue for the U.S. Concrete Waste Management Services segment improved by 28.6%, or $9.9 million, from $34.6 million in the nine months ended July 31, 2022 to $44.4 million. The increase in revenue was due to robust organic volume growth and pricing improvements.

*Corporate.* There was no change in revenue for our Corporate segment for the periods presented. Any year-over-year changes for our Corporate segment are primarily related to the intercompany leasing of real estate to certain of our U.S. Concrete Pumping branches. These revenues are eliminated in consolidation through the Intersegment line item.

#### Gross Profit and Gross Margin

*(in thousands, unless otherwise stated)*

| Gross Profit and Gross Margin | Nine Months Ended July 31, 2023 | 2022 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Gross Profit | 129,412 | 114,998 | 14,414 | 12.5% |
| Gross Margin | 40.2% | 40.2% |  |  |

*Gross margin.* Our gross margin for the nine months ended July 31, 2023 and 2022 was 40.2%. The margin has remained consistent due to the easing of diesel fuel prices being completely offset by inflationary pressures primarily in labor inflation.

#### General and administrative expenses

*General and administrative expenses ("G&A").* G&A expenses for the nine months ended July 31, 2023 were $87.2 million, an increase of $4.1 million from $83.2 million for the nine months ended July 31, 2022. The increase in G&A expenses was primarily due to (1) higher labor costs of approximately $6.2 million primarily due to additional headcount that joined the Company as a result of recent acquisitions, (2) higher rent, utilities and office expenses aggregating to $1.2 million primarily from recent acquisitions and (3) higher legal and accounting expenses, partially offset by $2.9 million in additional non-cash expense related to fluctuations in the GBP and lower amortization of intangible assets expense of $2.6 million. G&A expenses as a percent of revenue were 27.1% for fiscal 2023 compared to 29.0% for the same period a year ago.

Excluding amortization of intangible assets of $14.3 million, depreciation expense of $1.8 million and stock-based compensation expense of $3.1 million, G&A expenses were $68.0 million for the nine months ended July 31, 2023 (21.1% of revenue), up $7.7 million from $60.3 million for the nine months ended July 31, 2022 (21.0% of revenue). The increase was primarily due to the higher labor costs, legal and accounting costs, rent, utilities, and office expenses, which was partially offset by fluctuations in the GBP as discussed above.

#### Total other income (expense)

*Interest expense, net.* Interest expense, net for the nine months ended July 31, 2023 was $21.3 million, up $2.2 million from $19.1 million from the nine months ended July 31, 2022. The increase was primarily attributable to a higher average ABL revolver draw during the (nine months ended July 31, 2023) as compared to the same quarter a year ago.

*Change in fair value of warrant liabilities.* During the nine months ended July 31, 2023 the Company recognized a $6.6 million gain on the fair value remeasurement of our liability-classified warrants. During the nine months ended July 31, 2022 the Company recognized a $9.9 million gain on the fair value measurement of our liability-classified warrants. The continued decline in the fair value remeasurement of the public warrants for all periods presented is due to the Company's share price trading below the exercise price as the warrants get closer to expiring in December 2023.

#### Income tax expense

*Income tax expense.* For the nine months ended July 31, 2023, the Company recorded an income tax expense of $ 5.4 million on pretax income of $ 27.8 million. For the same period a year ago, the Company recorded an income tax expense of $ 2.5 million on pretax income of $ 22.7 million. The effective tax rate for the three and nine-month periods ended July 31, 2023 was primarily impacted by the respective change in fair value of warrant liabilities, which is not recognized for tax purposes.

### Adjusted EBITDA(1) and Net Income

*(in thousands)*

|  | Net Income Three Months Ended July 31, 2023 | 2022 | Adjusted EBITDA Three Months Ended July 31, 2023 | 2022 | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Concrete Pumping | $3,517 | $2,812 | $20,535 | $19,776 | $759 | 3.8% |
| U.K. Operations | 1,616 | 441 | 5,566 | 3,955 | 1,611 | 40.7% |
| U.S. Concrete Waste Management Services | 3,986 | 2,010 | 8,190 | 5,681 | 2,509 | 44.2% |
| Corporate | 1,217 | 7,713 | 625 | 625 | - | 0.0% |
| Total | $10,336 | $12,976 | $34,916 | $30,037 | $4,879 | 16.2% |

*(in thousands)*

|  | Net Income Nine Months Ended July 31, 2023 | 2022 | Adjusted EBITDA Nine Months Ended July 31, 2023 | 2022 | Change $% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| U.S. Concrete Pumping | $2,867 | $3,772 | $52,363 | $52,285 | $78 | 0.1% |
| U.K. Operations | 2,449 | 358 | 13,349 | 11,017 | 2,332 | 21.2% |
| U.S. Concrete Waste Management Services | 9,526 | 5,205 | 21,208 | 15,233 | 5,975 | 39.2% |
| Corporate | 7,557 | 10,809 | 1,875 | 1,875 | - | 0.0% |
| Total | $22,399 | $20,144 | $88,795 | $80,410 | $8,385 | 10.4% |

*(1) See “Non-GAAP Measures (EBITDA and Adjusted EBITDA)” below. As of the first quarter of fiscal 2023, we have modified the method in which adjusted EBITDA is calculated by no longer including an add-back for director costs and public company expenses. The Company recast adjusted EBITDA for U.S. Concrete Pumping in the three and nine months ended July 31, 2022 by $0.6 million and $1.9 million, respectively, for these expenses to reflect this change. See “Non-GAAP Measures (EBITDA and Adjusted EBITDA)” below for more information.*

*U.S. Concrete Pumping*. Net income for our U.S. Concrete Pumping segment was $3.5 million for the third quarter of fiscal 2023, versus net income of $2.8 million for the third quarter of fiscal 2022. Adjusted EBITDA for our U.S. Concrete Pumping segment was $20.5 million for the third quarter of fiscal 2023, versus $19.8 million for the same period in fiscal 2022. The increases in net income and Adjusted EBITDA were primarily attributable to recent acquisitions and organic growth.

Net income for our U.S. Concrete Pumping segment was $2.9 million for the nine months ended July 31, 2023, versus a net income of $3.8 million for the nine months ended July 31, 2022. Adjusted EBITDA for our U.S. Concrete Pumping segment was $52.4 million for the nine months ended July 31, 2023, versus $52.3 million for the same period in fiscal 2022.

*U.K. Operations.* Net income for our U.K. Operations segment was $1.6 million for the third quarter of fiscal 2023, versus net income of $0.4 million for the third quarter of fiscal 2022. Adjusted EBITDA for our U.K. Operations segment was $5.6 million for the third quarter of fiscal 2023, up 40.7% from $4.0 million from the same period in fiscal 2022. The increases were primarily attributable to the year-over-year improvement in revenue.

Net income for our U.K. Operations segment was $2.4 million for the nine months ended July 31, 2023, compared to a net income of $0.4 million for the nine months ended July 31, 2022. Adjusted EBITDA for our U.K. Operations segment was $13.3 million for the nine months ended July 31, 2023, up 21.2% from $11.0 million from the same period in fiscal 2022. The increases were primarily attributable to the year-over-year improvement in revenue.

*U.S. Concrete Waste Management Services.* Net income for our U.S. Concrete Waste Management Services segment was $4.0 million for the third quarter of fiscal 2023, versus net income of $2.0 million for the third quarter of fiscal 2022. Adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $8.2 million for the third quarter of fiscal 2023, up 44.2% from $5.7 million from the same period in fiscal 2022. The increases were primarily attributable to the year-over-year improvement in revenue as discussed above.

Net income for our U.S. Concrete Waste Management Services segment was $9.5 million for the nine months ended July 31, 2023, up from net income of $5.2 million for the nine months ended July 31, 2022. Adjusted EBITDA for our U.S. Concrete Waste Management Services segment was $21.2 million for the nine months ended July 31, 2023, up 39.2% from $15.2 million for the same period in fiscal 2022. The increases were primarily attributable to the year-over-year robust organic growth in revenue as discussed above.

*Corporate.* Net income for our Corporate segment was $1.2 million for the third quarter of fiscal 2023, compared to a net income of $7.7 million for the third quarter of fiscal 2022. The change in net income is primarily related to the change in warrant liability, as discussed above.

Net income for our Corporate segment was $7.6 million for the nine months ended July 31, 2023, down from net income of $10.8 million for the nine months ended July 31, 2022. The decrease from the nine months ended July 31, 2023 compared to the same period in fiscal 2022 was primarily related to the changes in the warrant liability, as discussed above.

There was no change in Adjusted EBITDA for our Corporate segment for the periods presented.

### Liquidity and Capital Resources

### Overview

Our capital structure is primarily a combination of (1) permanent financing, represented by stockholders’ equity; (2) zero-dividend convertible perpetual preferred stock; (3) long-term financing represented by our Senior Notes and (4) short-term financing under our ABL Facility. Our primary sources of liquidity are cash generated from operations, available cash and cash equivalents and access to our revolving credit facility under our ABL Facility, which provides for aggregate borrowings of up to $225.0 million, subject to a borrowing base limitation. We use our liquidity and capital resources to: (1) finance working capital requirements; (2) service our indebtedness; (3) purchase property, plant and equipment; and (4) finance strategic acquisitions, such as the acquisition of Pioneer, Coastal and others. As of July 31, 2023, we had $11.5 million of cash and cash equivalents and $184.0 million of available borrowing capacity under the ABL Facility, providing total available liquidity of $195.5 million.

We may from time to time seek to retire or pay down borrowings on the outstanding balance of our ABL Facility or Senior Notes using cash on hand. Such repayments, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.

We believe our existing cash and cash equivalent balances, cash flow from operations and borrowing capacity under our ABL Facility will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our rate of revenue growth, potential acquisitions and overall economic conditions. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity could result in dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could provide for operating and financing covenants that would restrict our operations.

### Material Cash Requirements

Our principal uses of cash historically have been to fund operating activities and working capital, purchases of property and equipment, strategic acquisitions, fund payments due under facility operating and finance leases, share repurchases and to meet debt service requirements.

Our working capital deficit as of July 31, 2023 was $2.4 million. We generally operate with a working capital deficit due to our efficient use of cash in funding operations and because we have consistent access to capital markets. We believe we have adequate coverage of our debt covenants.

The amount of our future capital expenditures will depend on a number of factors including general economic conditions and growth prospects. In response to changing economic conditions, we believe we have the flexibility to modify our capital expenditures by adjusting them (either up or down) to match our actual performance. Our capital expenditures for the nine months ended July 31, 2023 and 2022 were approximately $43.2 million and $81.0 million, respectively.

To service our debt, we require a significant amount of cash. Our ability to pay interest and principal on our indebtedness will depend upon our future operating performance and the availability of borrowings under the ABL Facility and/or other debt and equity financing alternatives available to us, which will be affected by prevailing economic conditions and conditions in the global credit and capital markets, as well as financial, business and other factors, some of which are beyond our control. Based on our current level of operations and given the current state of the capital markets, we believe our cash flow from operations, available cash and available borrowings under the ABL Facility will be adequate to service our debt and meet our future liquidity needs for the foreseeable future. See “Senior Notes and ABL Facility” discussion below for more information.

### Future Contractual Obligations

For information regarding our future contractual obligations, see the MD&A discussion included in Item 7 of Part II of our Annual Report.

### Senior Notes and ABL Facility

The table below is a summary of the composition of the Company’s debt balances as of July 31, 2023 and October 31, 2022:

*(in thousands)*

|  | Interest Rates | Maturities | As of July 31, 2023 | As of October 31, 2022 |
| --- | ---: | --- | ---: | ---: |
| Revolving loan - short term | Varies | January 2026 | $35,699 | $52,133 |
| Senior Notes - all long term | 6.0000% | February 2026 | 375,000 | 375,000 |
| Total debt, gross |  |  | 410,699 | 427,133 |
| Less: Unamortized deferred financing costs offsetting long term debt |  |  | (3,480) | (4,524) |
| Less: Revolving loan - short term |  |  | (35,699) | (52,133) |
| Long term debt, net of unamortized deferred financing costs |  |  | $371,520 | $370,476 |

On June 1, 2023, the ABL Facility was amended to, among other changes, (1) increase the maximum revolver borrowings available to be drawn thereunder from $160.0 million to $225.0 million, (2) increase the letter of credit sublimit from $10.5 million to $22.5 million and (3) extend the maturity of the ABL Facility to the earlier of (a) June 1, 2028 and (b) the date that is 180 days prior to (i) the final stated maturity date of the Senior Notes or (ii) the date the Senior Notes become due and payable. The ABL Facility also provides for an uncommitted accordion feature under which the borrowers under the ABL Facility can, subject to specified conditions, increase the ABL Facility by up to an additional $75.0 million. The $65.0 million in incremental commitments were provided by JPMorgan Chase Bank, N.A. and PNC Bank, N.A. The amended ABL Facility was treated as a debt modification. The Company capitalized an additional $0.5 million of debt issuance costs related to the June 1, 2023, ABL Facility amendment. The preexisting unamortized deferred costs of $1.4 million and the additional costs of $0.5 million will be amortized from June 1, 2023 through June 1, 2028.

The outstanding balance under the ABL Facility as of July 31, 2023 was $35.7 million and as of that date, the Company was in compliance with all debt covenants. In addition, as of July 31, 2023, the Company had $1.1 million in credit line reserves and a letter of credit balance of $4.2 million. As of July 31, 2023, we had $184.0 million of available borrowing capacity under the ABL Facility. Debt issuance costs related to revolving credit facilities are capitalized and reflected as an asset in deferred financing costs in the accompanying consolidated balance sheets. The Company had debt issuance costs related to the revolving credit facilities of $1.9 million as of July 31, 2023. See Note 9 for more information on the Senior Notes and ABL Facility.

### Cash Flows

Cash generated from operating activities typically reflects net income, as adjusted for non-cash expense items such as depreciation, amortization and stock-based compensation, and changes in our operating assets and liabilities. Generally, we believe our business requires a relatively low level of working capital investment due to low inventory requirements and timely customer payments due to daily billings for most of our services.

*Cash flow provided by operating activities.* Net cash provided by operating activities generally reflects the cash effects of transactions and other events used in the determination of net income or loss.

Net cash provided by operating activities during the nine months ended July 31, 2023 was $66.2 million. The Company had net income of $22.4 million, which included non-cash expense items of $46.5 million. In addition, we had cash outflows related to an increase to our working capital of $2.6 million. Working capital changes primarily include an increase in accrued payroll, accrued expenses and other current liabilities of $4.5 million, an increase in trade receivables of $3.2 million, a decrease of $2.1 million to accounts payable, an increase in inventory of $1.0 million and an increase in prepaid expenses and other assets of $0.9 million. The increase in accrued payroll, accrued expenses and other current liabilities is primarily related to timing of the payment of accrued interest. The Company makes semi-annual interest payments in February and August each year. The increase in trade receivables is due to stronger revenue growth. The decrease in accounts payable is driven by timing of vendor payments.

Net cash provided by operating activities during the nine months ended July 31, 2022 was $53.7 million. The Company had net income of $20.1 million, which included non-cash expense items of $40.9 million. In addition, we had cash outflows related to an increase to our working capital of $7.3 million. Working capital changes primarily include an increase to trade receivables of $11.0 million, an increase to prepaid expenses and other current assets of $1.2 million an increase in accrued payroll, accrued expenses and other current liabilities of $7.5 million and a decrease of $2.3 million to accounts payable. The increase to trade receivables is primarily due to timing of customer payments and seasonality of business volume increases during the second and third quarters of the fiscal year. The increase to prepaid expenses and other current assets is primarily due to timing of prepaid insurance, which is generally prepaid during first quarter of fiscal year 2022. The decrease to accounts payable is driven by timing of vendor payments. The increase in accrued payroll, accrued expenses and other current liabilities is primarily related to an increase in accrued interest. The Company makes semi-annual interest payments in February and August each year.

*Cash flow used in investing activities.* Net cash used in operating activities generally reflects the cash outflows for property, plant and equipment.

We used $35.9 million to fund investing activities during the nine months ended July 31, 2023. The Company used $43.2 million for the purchase of property, plant and equipment and $0.8 million for the purchase of intangible assets, which was partially offset by $8.0 million in proceeds from the sale of property, plant and equipment.

We used $76.2 million to fund investing activities during the nine months ended July 31, 2022. The Company used $81.0 million for the purchase of property, plant and equipment and $1.5 million for the purchase of intangible assets, which was partially offset by proceeds from the sale of property, plant and equipment of $6.2 million.

*Cash flow provided by (used in) financing activities.*

Net cash used in financing activities was $26.7 million for the nine months ended July 31, 2023. Financing activities during this period included $9.7 million in purchase of treasury stock, which included $8.6 million purchased under the share repurchase program and $1.1 million in outflows from the purchase of shares into treasury stock in order to fund the employee tax obligations for certain vested stock awards. In addition, cash used in financing activities included $16.4 million in net proceeds under the Company's ABL Facility.

Net cash provided by financing activities was $14.4 million for the nine months ended July 31, 2022. Financing activities during this period primarily included $16.1 million in net borrowings under the Company’s ABL Facility that were partially offset by $1.4 million in outflows from the purchase of shares into treasury stock in order to fund the employee tax obligations for certain vested stock awards.

### Accounting and Other Reporting Matters

### Non-GAAP Measures (EBITDA and Adjusted EBITDA)

We calculate EBITDA by taking GAAP net income and adding back interest expense, income taxes, depreciation and amortization. Adjusted EBITDA is calculated by taking EBITDA and adding back transaction expenses, loss on debt extinguishment, stock-based compensation, other income, net, goodwill and intangibles impairment and other adjustments. Transaction expenses represent expenses for legal, accounting, and other professionals that were engaged in the completion of various acquisitions. Transaction expenses can be volatile as they are primarily driven by the size of a specific acquisition. As such, we exclude these amounts from Adjusted EBITDA for comparability across periods. Other adjustments include the adjustments for warrant liabilities revaluation, non-recurring expenses and non-cash currency gains/losses. As of the first quarter of fiscal 2023, we have modified the method in which adjusted EBITDA is calculated by no longer including an add-back for director costs and public company expenses. Adjusted EBITDA in the three and nine months ended July 31, 2022 is recast by $0.6 million and $1.9 million, respectively, for these expenses to reflect this change.

We believe these non-GAAP measures of financial results provide useful supplemental information to management and investors regarding certain financial and business trends related to our financial condition and results of operations, and as a supplemental tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial measures with competitors who also present similar non-GAAP financial measures. In addition, these measures (1) are used in quarterly and annual financial reports prepared for management and our board of directors and (2) help management to determine incentive compensation. EBITDA and Adjusted EBITDA have limitations and should not be considered in isolation or as a substitute for performance measures calculated under GAAP. These non-GAAP measures exclude certain cash expenses that we are obligated to make. In addition, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently or may not calculate it at all, which limits the usefulness of EBITDA and Adjusted EBITDA as comparative measures.

*(in thousands)*

| Consolidated | Three Months Ended July 31, 2023 | 2022 | Nine Months Ended July 31, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $10,336 | $12,976 | $22,399 | $20,144 |
| Interest expense, net | 7,066 | 6,517 | 21,285 | 19,126 |
| Income tax expense | 3,318 | 2,030 | 5,427 | 2,535 |
| Depreciation and amortization | 14,707 | 14,190 | 43,877 | 42,505 |
| EBITDA | 35,427 | 35,713 | 92,988 | 84,310 |
| Transaction expenses | 5 | 20 | 32 | 59 |
| Stock-based compensation | 934 | 1,333 | 3,138 | 4,164 |
| Change in fair value of warrant liabilities | (911) | (7,420) | (6,639) | (9,894) |
| Other income, net | (262) | (16) | (296) | (69) |
| Other adjustments(1) | (277) | 407 | (428) | 1,840 |
| Adjusted EBITDA | $34,916 | $30,037 | $88,795 | $80,410 |

*(in thousands)*

| U.S. Concrete Pumping | Three Months Ended July 31, 2023 | 2022 | Nine Months Ended July 31, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $3,517 | $2,812 | $2,867 | $3,772 |
| Interest expense, net | 6,337 | 5,795 | 19,163 | 16,879 |
| Income tax expense | 1,318 | 961 | 1,026 | 258 |
| Depreciation and amortization | 10,498 | 9,927 | 31,464 | 29,615 |
| EBITDA | 21,670 | 19,495 | 54,520 | 50,524 |
| Transaction expenses | 5 | 20 | 32 | 59 |
| Stock-based compensation | 934 | 1,333 | 3,138 | 4,164 |
| Other income, net | (257) | (6) | (273) | (43) |
| Other adjustments(1) | (1,817) | (1,066) | (5,054) | (2,419) |
| Adjusted EBITDA | $20,535 | $19,776 | $52,363 | $52,285 |

(1) Other adjustments include the adjustment for warrant liabilities revaluation, non-recurring expenses and non-cash currency gains/losses. As of the first quarter of fiscal 2023, we modified the method in which adjusted EBITDA is calculated by no longer including an add-back for director costs and public company expenses. The Company recast adjusted EBITDA for U.S. Concrete Pumping in the three and nine months ended July 31, 2022 by $0.6 million and $1.9 million, respectively, for these expenses to reflect this change.

*(in thousands)*

| U.K. Operations | Three Months Ended July 31, 2023 | 2022 | Nine Months Ended July 31, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $1,616 | $441 | $2,449 | $358 |
| Interest expense, net | 729 | 722 | 2,122 | 2,247 |
| Income tax expense | 545 | 153 | 831 | 122 |
| Depreciation and amortization | 1,879 | 1,881 | 5,555 | 5,892 |
| EBITDA | 4,769 | 3,197 | 10,957 | 8,619 |
| Other income, net | (6) | (5) | (23) | (11) |
| Other adjustments | 803 | 763 | 2,415 | 2,409 |
| Adjusted EBITDA | $5,566 | $3,955 | $13,349 | $11,017 |

*(in thousands)*

| U.S. Concrete Waste Management Services | Three Months Ended July 31, 2023 | 2022 | Nine Months Ended July 31, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $3,986 | $2,010 | $9,526 | $5,205 |
| Income tax expense | 1,352 | 796 | 3,257 | 1,832 |
| Depreciation and amortization | 2,114 | 2,170 | 6,214 | 6,361 |
| EBITDA | 7,452 | 4,976 | 18,997 | 13,398 |
| Other expense (income), net | 1 | (5) | - | (15) |
| Other adjustments | 737 | 710 | 2,211 | 1,850 |
| Adjusted EBITDA | $8,190 | $5,681 | $21,208 | $15,233 |

*(in thousands)*

| Corporate | Three Months Ended July 31, 2023 | 2022 | Nine Months Ended July 31, 2023 | 2022 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $1,217 | $7,713 | $7,557 | $10,809 |
| Income tax expense | 103 | 120 | 313 | 323 |
| Depreciation and amortization | 216 | 212 | 644 | 637 |
| EBITDA | 1,536 | 8,045 | 8,514 | 11,769 |
| Change in fair value of warrant liabilities | (911) | (7,420) | (6,639) | (9,894) |
| Adjusted EBITDA | $625 | $625 | $1,875 | $1,875 |

### Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are disclosed in the “Critical Accounting Policies and Estimates” section of our Annual Report. No modifications have been made during the nine months ended July 31, 2023 to these policies or estimates.

### New Accounting Pronouncements

For information regarding recent accounting pronouncements, see Note 2 to the condensed consolidated financial statements included within Item 1 of this report for more information.

## Controls and procedures

As filed, 4,118 characters.

### Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management of the Company, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met. The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Report. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that, as of July 31, 2023, the Company’s disclosure controls and procedures were not effective due to the material weaknesses described below.

### Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management previously identified and disclosed two material weaknesses in "Item 9A Controls and Procedures" of the Company’s Annual Report. Specifically, material weaknesses were identified related to (1) the review of manual journal entries within the financial statement close process, which was identified in connection with the restatement of the Company’s interim unaudited financial statements as of July 31, 2022 ("MW #1"); and (2) the areas of user access and segregation of duties related to information technology systems that support the financial reporting process specifically related to accounts payable and expenditures ("MW #2").

Additionally, these material weaknesses could result in a misstatement of the accounts or disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

### Remediation Activities

As of July 31, 2023, management designed and implemented measures that it believes remediate the identified material weaknesses. Specifically, for MW #1, controls were designed and implemented and evidenced to ensure that journal entries are adequately reviewed and approved, and for MW #2, the Company has designed and implemented a review of user activity reports and control activities to ensure appropriate segregation of duties. Notwithstanding these measures, due to the nature of the remediation process, newly implemented controls must operate effectively for a sufficient period of time for a definitive conclusion, validated through testing, that the deficiencies have been fully remediated and, as such, management can give no assurance that the measures it has undertaken have fully remediated the material weaknesses that it has identified or that additional material weaknesses will not arise in the future. Consequently, management will continue to monitor the design and effectiveness of these controls through ongoing tests and will make any further changes that management determines to be appropriate.

### Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during our third fiscal quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 237 characters.

There have been no material changes to the Risk Factors previously disclosed in our Annual Report. For a detailed discussion of the risks that affect our business, please refer to the section entitled “Risk Factors” in the Annual Report.

Filed Sep 7, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-025409. Last ingested by Listed: Oct 24, 2026, 15:15 ET. No prices; not investment advice.